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TMI Blog2015 (2) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Bombay Provincial Municipal Corporation Act, 1949 ("BPMC Act" for short) in the Court of Civil Judge, Senior Division, Kalyan ("CJSD" for short). The details of the appeals are tabulated below :- Municipal Appeal No. Amount (Rs.) Bill No. 52/96 1,20,44,430.00 33602 18/97 2,31,98,033.5o 33628 19/98 3,41,45,421.5o 5201 09/99 4,28,93,736.5o o10301 04/01 5,15,74,599.5o 205 33/01 6,23,37,714.00 54335 23/02 7,31,00,828.00 61054 20/04 7,82,27,274.00 6713 3). The petitioner had earlier filed Writ Petitions in this Court to challenge the demand notices issued to them on the basis of the rateable value fixed. Those petitions were dismissed by this Court in view of alternate remedy available to the petitioner by way of an appeal under Section 406 of the BPMC Act. The petitioner carried the order to the Apex Court in S.L.P. No. 14419 of 2006. By the order dated 13th November, 2006, while disposing off the S.L.P., the Apex Court took note of the appeals under Section 406 of the BPMC Act, that had been already filed by the petitioner and the fact that at no point of time, the petitioner had led evidence of an expert valuer on the question of fixation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually agreed upon. 5). Without depositing the amount in the Escrow Account, the petitioner, by its letter dated 6th October, 2009 requested Justice A.P. Agiar (Retired) for acting as a sole arbitrator for adjudication of the dispute relating to the rateable value. By the letter dated 8th October, 2009 Justice Agiar (Retired) gave his acceptance. KDMC also by its letter dated 25th November, 2009 made a similar request to Justice Agiar (Retired). Then, on 13th July, 2010, a common application was filed before the Court of CJSD under Section 408 of BPMC Act for referring the dispute for arbitration. The application was, however, subsequently opposed by KDMC, contending that, the petitioner had committed breach of the terms and conditions of agreement by not depositing the amount of Rs. 6,68,76,000/- in the Escrow Account. KDMC also contended that the agreement dated 22nd April, 2009 was not in accordance with Chapter-5 of BPMC Act, in as much as, there was no approval of the Standing Committee for execution of the agreement. The Court of CJSD, Kalyan by its order dated 18th January, 2012 dismissed the application. 6). Being aggrieved by the order of CJSD, Kalyan, the petitioner pref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of BPMC Act and of Section 8 of the Arbitration and Conciliation Act ("Arbitration Act" for short), is such that the Court is bound to refer the matter for arbitration. It was also contended that, opening an Escrow Account and deposit of amount therein has no bearing with the issue of referring the matter to the Arbitrator. Besides, both the parties had already acted upon the agreement by approaching the sole arbitrator and obtaining his consent. 10). The KDMC, on the other hand, argued before the District Court that deposit of the amount in Escrow Account was a condition precedent to refer the matter for arbitration and in view of noncompliance with the condition, there could be no reference to the arbitration. According to it, the agreement dated 22nd April, 2009 is null and void as there is no approval of Standing Committee or Government to the agreement. The dispute as regards the rateable value of the property had already been carried upto the Apex Court and the Apex Court had directed the petitioner to lead evidence in the appeals by examining it's valuer. But, the petitioner with a view to delay the decisions in the appeals filed the application. One more argument advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n obligation on the Court to refer the matter for arbitration, and (ii) Whether deposit of Rs. 6,68,76,000/- in Escrow Account by the petitioner is the condition precedent under the agreement for reference of the dispute to arbitration. 14). It would be convenient to reproduce Section 8 of the Arbitration Act and Section 408 of the BPMC Act for ready reference : "8. Power to refer parties to arbitration where there is an arbitration agreement.- (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made. "408. Arbitration- Where any ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision cited, the question of existence of an arbitration agreement arose for consideration of the Apex Court in the facts of discharge of the agreement by performance and satisfaction. The dispute before the Apex Court had arisen out of a contract of insurance, which contained a clause for arbitration. There was a settlement arrived at between the parties as regards the insurance claim and the insured had issued "discharge voucher-inadvance" acknowledging receipt of amount in full and final settlement of the insurance claim. The insured, however, subsequently raised a dispute as regards the settlement alleging that settlement had been arrived at under duress and coercion. It filed an application under Section 11 of the Arbitration Act in this Court. The application was opposed by the insurer with a contention that the insured could not invoke the arbitration clause in the agreement as the agreement stood discharged by accord and satisfaction. In the facts, the question framed by the Apex Court for its consideration was "In what circumstances, a Court will refuse to refer a dispute relating to quantum to arbitration, when the contract specifically provides for reference of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the proceedings before the Arbitral tribunal." "47. (iv) The Chief Justice or the designated judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be, his own jurisdiction, to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators." (emphasis supplied) 18). In the case of SBP & Co., the Apex Court had also examined the competence of the Arbitral Tribunal to rule upon its own jurisdiction and about the existence of the arbitration clause when the Chief Justice or his designate had appointed an Arbitral Tribunal under Section 11 of the Act after deciding upon such jurisdictional issue. It was held that the decision of the Chief Justice on the issue of jurisdiction and existence of an valid arbitration agreement would be binding on the parties when the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as obtained by fraud, coercion or undue influence, the Chief Justice or his designate may decide the same, if necessary, by taking evidence. Alternatively, he may leave the issues open with a direction to the Arbitral Tribunal to decide the same. Thus the issue can be decided by the Arbitral Tribunal only if the Chief Justice/designate leaves the question to be decided by the Arbitral Tribunal and gives directions in the regards. 20). The Apex Court has thus drawn distinction between reference to arbitration of dispute without intervention of the Court and the reference to arbitration with recourse to Section 11 of the Arbitration Act. Where the reference is made without intervention of the Court, the Arbitral Tribunal can decide the question affecting it's jurisdiction, one of which is the existence and validity of the arbitration agreement. But, where the intervention of the Court is sought for the purpose, the Court has the discretion to decide the preliminary issue of existence and validity of the arbitration agreement. The same principle will have to apply to an application for reference to arbitration made under Section 8 of the Arbitration Act. Infact, this has been so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection Certificate to the company for sale of Saleable land admeasuring 339.40 acres as per Annexure "B" stating that the purchaser shall be liable for the municipal taxes charged by the Corporation including Open land tax only from the date of conveyance irrespective of tax dispute of the said land between KDMC and NRC Limited, provided that the Company deposit an amount of Rs. 6,68,76,000/- in the Escrow Account in accordance with para 2 of the agreement. The said No Objection Certificate shall be issued within 7 days from the date of Execution of this agreement as per draft given in Annexure "D" annexed hereto." "2. It is agreed that the agreement for sale dtd. 1/3/2007 and supplementary agreement dtd 29/9/2007 between NRC Limited & M/s. K. Raheja Universal has already been executed and conveyance deed in pursuance thereto shall be executed after NOC from the Corporation. As per the said agreement, two installments are already released by M/s. K. Raheja Universal and the third installment is due after getting NOC from the Corporation and completing the formalities of fencing vacant possession of non-colony ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds that, the purchaser had already released two installments of the consideration and that the third installment was to be paid after (i) getting "No Objection Certificate" from KDMC, (ii) completing fencing of the property and (iii) execution of conveyance. The clause further says that, the petitioner shall deposit amount in Escrow Account within FOUR MONTHS after the payment of the third installment. This would mean that, the petitioner agreed to deposit the amount on expiry of substantial period after completion of transaction of sale. In this way, the petitioner made the property unavailable to KDMC for recovery of it's tax dues. It would be pertinent to note at this stage, that caught in such situation, KDMC issued the "No-Objection Certificate" on the basis of which the petitioner has already received the third instalment of consideration from the purchasers. When enquired about the deposit in the Escrow Account, Mr. Sawant, submits that the non-deposit would be one of the issues falling for consideration of the Arbitral Tribunal. Thus, the petitioner has merely derived the benefits from the agreement but resiled from the obligations. These undisputed facts establish the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay, it is 18 years since the filing of the first appeal by the petitioner and 10 years since the filing of the last appeal. It would also be relevant to note here that, the petitioner had initially filed Writ Petition to challenge the demand for taxes when the petitions were patently not maintainable. Had the petitioner on due adjudication of the dispute discharged it's tax liability, a substantial amount would have been available to KDMC for utilisation for public purposes. On account of the mischievous and dishonest conduct on the part of the petitioner, the public body has been deprived of it's legitimate funds from the year 1996 till date. 28). For all the above reasons, the petitions are dismissed with costs. The petitioner shall pay costs quantified at Rs. 1,00,000/- (Rs. One Lakhs only) for each petition to respondent no.1, KDMC. The costs to be paid within a period of 2 weeks from today. If the costs are not paid within the time granted, the appeals filed by the petitioner in the Court of Civil Judge Senior Division, Kalyan shall stand dismissed without further reference to the Court. After payment of costs, the petitioner, if it so desires, is at liberty to deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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